The Walloon Government definitively adopts the draft decree relating to the reform of Walloon taxation and establishing a reduced rate of registration duties for the acquisition of a single, own home as well as a general reduction in inheritance taxes. The texts of the tax measures will be discussed in early December in the Walloon Parliament. As announced in September by the Walloon Government, registration fees will be reduced to 3% from January 2025.
Context
The Regional Policy Declaration provides for an unprecedented and very ambitious tax reform, a real tax revolution, in order to “restore oxygen to the middle class through administrative simplification and tax relief”. The Government has in fact planned to fundamentally reform taxes which have not been reformed for years, to greatly simplify them and to make the tax truly more transparent and fairer: the tax must “ allow us to contribute to the financing of solidarity but it can in no way be an obstacle to the emancipation of the middle and working classes ».
The objective pursued by the Government is to return to citizens more than 700 million euros accumulated during this legislature and to simplify, where possible, the applicable legal rules for greater effectiveness and efficiency of the Walloon taxation.
Several measures
- 3% registration fees for the acquisition of your own unique home
It is becoming more and more difficult, especially for young adults who wish to do so, to acquire real estate. However, as we know, Belgians in general and Walloons in particular have always had “a brick in their stomach”. A particularly positive tradition which has always constituted a real guarantee against the emergence and increase of the risks of poverty over the course of life and, particularly, at retirement age.
The Government has decided to direct significant resources towards an advanced policy of assistance in the acquisition of a clean and unique home. So, from 1is January 2025, the rate of registration fees applicable to real estate intended to become its own and sole home will be significantly reduced to 3% instead of the current ordinary rate of 12.5%.
And in order to take into account the evolution of life (household, children, profession, etc.), it will even be allowed to benefit from the 3% as the current owner of a home, on the condition of reselling within three years from the acquisition of the new property.
At the same time, the various regimes which coexisted until now will be abolished:
- The first-time buyer reduction: reduction of rights up to 5,000 euros which was not sufficiently impactful;
- The housing voucher: a scheme which mobilizes substantial resources as aid for ownership to the detriment of aid concentrated on acquisition, access to property which nevertheless today constitutes the major problem of a very large number of households wishing to buy their home;
- The reduced rate for modest housing: reduction based on cadastral income, a criterion which has become a source of great inequities between those liable (absence of general equalization, lack of control of the cadastral value by the federal government in the event of improvement of the property, etc.).
- Sharp drop in inheritance and property donation taxes
The other major tax measure that the Government intends to implement under this legislature aims to radically reduce inheritance taxes through strong action on current rates.
As the Regional Policy Declaration states, “ inheritance rights are based on historical family notions which do not always reflect the richness and multiplicity of emotional ties. They are also based on price scales that are difficult to read and on rates that today appear confiscatory. “. Indeed, the current pricing structure appears unfair with high rates of up to 80%.
The Government decides to take strong action and halves all applicable rates, both between spouses and legal cohabitants and in the direct line (parents, children, grandchildren, etc.), in the collateral line (brother, sister, uncle , aunt, nephew, niece), as well as all other people (cousins, friends, de facto cohabitants, etc.).
So, for example, the maximum rates will pass from 1is January 2028:
- from 30% to 15% directly, between spouses and between legal cohabitants;
- from 65% to 33% in the collateral line “brothers and sisters”;
- from 70% to 35% in collateral line “uncles or aunts and nephews or nieces”;
- from 80% to 40% among all other people.
In addition to this reduction in inheritance taxes, the rates of real estate gift taxes will be revised downwards at the same time in order to maintain an attractiveness for this early transfer of assets which often allows partial reinvestment in the economy.
So, for example, the maximum rates will pass from 1is January 2028:
- from 27% to 14% in direct line, between spouses and between legal cohabitants;
- from 40% to 20% between all other people (from brothers and sisters to other people).
The minimum taxable amounts for inheritance tax are also modernized for the benefit of all those liable for greater transparency and simplicity.
Finally, the effective resumption of competence by the Region will make it possible to improve the procedures for controls and recovery of both registration fees and inheritance taxes. As the DPR specifies, it will be necessary to “strengthen the fight against tax fraud and evasion, while respecting the fundamental rights of citizens”. It will therefore be necessary to implement effective verification and control strategies at the SPW Finances level in order to prevent both cases of potential tax abuse and the various tax fraud mechanisms that can be implemented.
- Improved tax justice
In order to take into account changes in the composition of the family household (recomposed family), the assimilation of children of the spouse/legal cohabitant of the deceased (or donor) will be extended to all descendants to allow grandchildren or great-grandchildren – children of the spouse or legal cohabitant to benefit from the preferential rates of the direct line for inheritance tax (or real estate donation).
In the same sense, without prejudice to the rules of civil law, children integrated into foster families will be assimilated to the biological children of the deceased and the donor. Even if this does not concern a large number of children, it seems totally unfair to consider them as strangers to the family household after several years of living with their host family.
Then, various other measures are taken in terms of inheritance tax, such as the creation of an optional lump sum of funeral expenses and “small” debts of the deceased in order to simplify the obligations of heirs who already have to face all the difficulties that generate naturally the death of a loved one.
It is also planned to remove the condition of occupation of the building having served as the main residence of the deceased and his spouse during the five years preceding the death to benefit from tax advantages at the level of the surviving spouse (exemption) or the remainder of the direct line (favorable rate) since this can lead to serious consequences that are not appropriate and not justified.
Finally, a significant modernization of the reduction measure for unproductivity in terms of property withholding tax is planned, in particular following the dramatic experience of the floods of July 2021 and the great difficulty noted by those liable to obtain this exemption. On the one hand, in the event of recognized public calamities, the condition of 180 days of vacancy during the year is thus revised to be significantly reduced (this condition could not, for example, be reached in July 2021 given that less than 180 days remained in the calendar year). On the other hand, the condition relating to the obligatorily unfurnished aspect of the property concerned is deleted, because it is no longer considered relevant.
Adrien DOLIMONT, Minister-President of Wallonia : « Lhe reduction in registration fees to 3% will be fully applied from January 1, 2025, in accordance with the commitments made. This measure aims to support accessibility to property, while promoting a dynamic and attractive economic environment for families and investors. Respecting deadlines and implementing this reform demonstrates the will of the Government Walloon to meet citizens’ expectations and strengthen tax fairness in Wallonia. »
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